Tuesday, May 10, 2016

Delinquent customer accounts can bring
your small business' cash flow to a grinding halt. But before you
hand over your bad debt to a collection agency you may want to revamp
your own attempts to secure those overdue payments. Establishing a
clear-cut system of debt collection that effectively uses all the
tools at your disposal will greatly improve your chances of receiving
your money.

As
you begin to put together a system for recovering outstanding debt,
you should first look at your accounting software. Several of the
major accounting software vendors, such as Freshbooks, Wave, and
Quickbooks Online offer a range of features that will help make your
debt collection run more smoothly. Among other things, these
applications can clearly organize and display all the information you
may need regarding your customers and their outstanding invoices.

What
to look for in Your Accounting Software...

There are four basic functions that
will be the most helpful to your business when dealing with overdue
accounts. Not all software packages offer these features so be sure
to do some research as you work with your current program or switch
to a new one:

1. The
A/R account is easy to manage.
Your accounts receivables, A/R, account holds all your information
regarding the payment activities of your customers. Each time you
extend credit to a customer it will be recorded in your A/R. It is
thus very important that you review your A/R regularly so that you
will be able to see at a glance who has paid and who hasn't and when
the outstanding payments are due. Accounting software that makes it
easy to create, review and manage your A/R will help you to stay in
touch with your cash
flow
and give you the confidence to make decisions on overdue accounts.2.
Reporting the customer transaction history. The
most powerful tool that your small business can have when it comes to
debt collection is an accurate and detailed record of your customer's
transaction history. Many accounting
software packages will allow you to view the all
the necessary information associated with an outstanding invoice,
including customer's name and phone number, making it easier for you
contact the customer and follow up on the outstanding payment.3.
Invoice tracking and management. With
invoice tracking you will clearly see which of your invoices are paid
in full, partially paid, past due or unpaid so you can clearly see
who owes you money and when the payment is due.

4.
Help with collection letters. A
few software packages will help you compose
professional-looking collection letters that can be sent out as
payment reminders to your customers. The program can generate these
letters with all the necessary details, such as the amount of
outstanding debt and the date on which the amount was payable.